Russell v. . Owen

Connor, J. In both the policies of insurance issued by the Equitable Life Assurance Society of the United States, on the life of her husband, *266 Delagnier S. Owen, the defendant, Violet Russell Owen, his wife, was named as beneficiar y. She was so named at the date of the issuance of the policies. In each policy the right to change the beneficiary at any time while the policy was in force, in accordance with its terms and provisions, was reserved to the insured. In neither case, however, was this right exercised or attempted to be exercised by the insured while the policy was in force. Therefore, at the death of the insured, the proceeds of both policies, but for the assignments executed by both the insured and the beneficiary, were payable to Violet Russell Owen, as the beneficiary named in the policies. Her right to the proceeds of the policies, while contingent during the life of her husband upon a change by him of the beneficiary, became vested at his death. In Parker v. Potter, 200 N. C., 348, 157 S. E., 68, it is said: “This proposition calls for a determination of the deceased wife’s interest in the contract. "Was it vested or contingent? If she had an unconditional vested right, her status was such that the insured could not destroy her interest without her consent, except as he could destroy his own right or interest by a forfeiture of the policy. Conigland v. Smith, 79 N. C., 303, modified in Hooker v. Sugg, 102 N. C., 115. In an ordinary policy of life insurance, the beneficiary acquires a vested interest from the time the insurance takes effect, if in the contract there is no stipulation reserving to the insured a right to change the beneficiary, assign the policy or divert the proceeds, unless the language of the policy is inconsistent with a vested interest. Herring v. Sutton, 129 N. C., 107. Lanier v. Insurance Co., 142 N. C., 14; Wooten v. Order of Odd Fellows, 176 N. C., 52; Lockhart v. Insurance Co., 193 N. C., 8. This principle, however, does not prevail when the right or interest of the particular beneficiary is subject to be changed or to be defeated under the terms of the contract by which it was created. Wooten v. Order of Odd Fellows, supra; Pollock v. Household of Ruth, 150 N. C., 211. If thus subject to be changed or defeated, the interest of the beneficiary is not property but a mere expectancy which cannot ripen into a vested interest before the death of the insured.” In the instant case, no change of beneficiary having been made by tho insured while the policies were in force, the interest of Violet Russell Owen, as beneficiary named in each policy at the time it was issued, ceased to be contingent upon the death of the insured; upon his death, it ripened into a vested interest, with the result that, subject only to the rights of the creditor of the insured, the Equitable Life Assurance Society of the United States, under the assignments executed while the policies were in force, by both the insured and the beneficiary, the proceeds of the policies became and were the property of Violet Russell *267 Owen, free from all the claims of the representatives of her husband or any of his creditors (Const. of N. C., Art. X, sec. 7, C. S., 6464, Pearsall v. Bloodworth, 194 N. C., 628, 140 S. E., 303), except the claims of the Equitable Life Assurance Society of the United States, as assignee of the policies. In Pearsall v. Bloodworth, supra, it is said there is a well recognized distinction in law between the assignment of a policy and a change of beneficiary, certainly where the policy itself delegates the power to change the beneficiary at the option of the insured. In the instant case, the claim of the Equitable Life Assurance Society to the proceeds of the policies was as assignee and not as beneficiary. The policies were assigned by the insured and the beneficiary, jointly, to the Equitable Life Assurance Society, as additional security for bonds executed by the insured as principal, and the beneficiary as surety. These bonds were also secured by deeds of trust on lands owned by the insured. After the death of the insured, the bonds were paid out of the proceeds of the policies of insurance. Thus the property of the surety, with her consent, was applied to the payment of the bonds on which the insured was liable as principal. By reason of these facts, the defendant, Violet Russell Owen, became a creditor of the estate of her husband, plaintiff’s intestate, in the amount due on the bonds, and paid out of her property, to wit: $7,269.93. As such creditor, she is entitled to be subrogated to all the rights of the Equitable Life Assurance Society under the deeds of trust which Delagnier S. Owen had executed to convey the bonds thereby. O. S., 3964 and cases cited. There is error in the judgment with respect to the rights of Violet Russell Owen as a creditor of the estate of plaintiff’s intestate. For this reason, the judgment is Reversed.